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Big data analytics in E-commerce: a systematic

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Article in Electronic Markets · April 2016

DOI: 10.1007/s12525-016-0219-0

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 Electronic Markets – The International Journal
on Networked Business
Full Title of Article: Big Data Analytics in E-Commerce: A Systematic Review and
Agenda for Future Research

Key Words (for indexing and abstract Big data analytics, e-commerce, business value
services – up to 6 words):

Citation: Akter, S. & Fosso, Wamba, S. (2016). Big Data Analytics in E-

Commerce: A Systematic Review and Agenda for Future Research,
Electronic Markets, DOI 10.1007/s12525-016-0219-0.

Abstract:

There has been an increasing emphasis on big data analytics (BDA) in e-commerce in recent

years. However, it remains poorly-explored as a concept, which obstructs its theoretical and

practical development. This position paper explores BDA in e-commerce by drawing on a

systematic review of the literature. The paper presents an interpretive framework that explores

the definitional aspects, distinctive characteristics, types, business value and challenges of BDA

in the e-commerce landscape. The paper also triggers broader discussions regarding future

research challenges and opportunities in theory and practice. Overall, the findings of the study

synthesize diverse BDA concepts (e.g., definition of big data, types, nature, business value and

relevant theories) that provide deeper insights along the cross-cutting analytics applications in e-

commerce.

1
 1. Introduction

In the past few years, an explosion of interest in big data has occurred from both academia and

the e-commerce industry. This explosion is driven by the fact that e-commerce firms that inject

big data analytics (BDA) into their value chain experience 5–6% higher productivity than their

competitors (McAfee and Brynjolfsson, 2012). A recent study by BSA Software Alliance in the

United States (USA) indicates that BDA contributes to 10% or more of the growth for 56% of

firms (Columbus, 2014). Therefore, 91% of Fortune 1000 companies are investing in BDA

projects, an 85% increase from the previous year (Kiron et al., 2014a). While the use of

emerging internet-based technologies provides e-commerce firms with transformative benefits

(e.g., real-time customer service, dynamic pricing, personalized offers or improved interaction)

(Riggins, 1999), BDA can further solidify these impacts by enabling informed decisions based

on critical insights (Jao, 2013). Specifically, in the e-commerce context, “big data enables

merchants to track each user’s behavior and connect the dots to determine the most effective

ways to convert one-time customers into repeat buyers” (Jao, 2013,p.1). Big data analytics

(BDA) enables e-commerce firms to use data more efficiently, drive a higher conversion rate,

improve decision making and empower customers (Miller, 2013). From the perspective of

transaction cost theory in e-commerce (Devaraj et al., 2002; Williamson, 1981), BDA can

benefit online firms by improving market transaction cost efficiency (e.g., buyer-seller

interaction online), managerial transaction cost efficiency (e.g., process efficiency-

recommendation algorithms by Amazon) and time cost efficiency (e.g., searching, bargaining

and after sale monitoring). Drawing on the resource-based view (RBV)(Barney, 1991), we

argued that BDA is a distinctive competence of the high-performance business process to

2
support business needs, such as identifying loyal and profitable customers, determining the

optimal price, detecting quality problems, or deciding the lowest possible level of inventory

(Davenport and Harris, 2007a). In addition to the RBV, this research views BDA from the

relational ontology of sociomaterialism perspective, which puts forward the argument that

different organizational capabilities (e.g., management, technology and talent) are constitutively

entangled (Orlikowski, 2007) and mutually supportive (Barton and Court, 2012) in achieving

firm performance. Finally, service marketing offers the perspective of improving service

innovation models, which has been reflected by firms such as Rolls Royce (Barrett et al., 2015),

Amazon, Google and Netflix (Davenport and Harris, 2007a) . As such, the extant literature

identifies BDA as the platform for “growth of employment, increased productivity, and increased

consumer surplus” (Loebbecke and Picot, 2015, p.152), the “next big thing in innovation”

(Gobble, 2013, p.64); “the fourth paradigm of science” (Strawn, (2012); “the next frontier for

innovation, competition, and productivity” (p. 1) and the next “management revolution” (p. 3)

(McAfee and Brynjolfsson, 2012); or that BDA is “bringing a revolution in science and

technology” (Ann Keller et al., 2012); etc. Due to the high impact in e-commerce, notably in

generating business value, BDA has recently become the focus of academic and industry

investigation (Fosso Wamba et al., 2015c). As shown on Table 1, there is a steady growth in the

BDA market, and in the number of global e-commerce customers and their per capita sales.

Although an increasing amount of published materials has focused on practitioners in this

domain, the literature remains largely anecdotal and fragmented. There is a paucity of research

that provides a general taxonomy from which to explore the dimensions and applications of big

data in e-commerce. The purpose of this research therefore is to identify different conceptual

dimensions of big data in e-commerce and their relevance to business value. This paper focuses
3
on e-commerce firms that capture business value through using big data analytics (BDA). The

extant literature shows that BDA could allow an e-commerce firm to achieve a range of benefits,

such as: enhanced pricing strategies for products and services (Christian, 2013); targeted

advertising; better communication between research and development (R&D) and product

development; improved customer service; improved multi-channel integration and coordination

(IBM, 2013); enhanced global sourcing from multiple business units and locations, and, overall,

suggesting models and ways to capture greater business value (Beath et al., 2012; Fosso Wamba

et al., 2015a; Sharma et al., 2014). The research question that has driven this study focuses on:

how is “big data analytics” different from traditional analytics in the e-commerce environment in

creating business value? To answer this research question, the paper aims to provide a general

taxonomy to broaden the understanding of BDA and its role in creating business value. More

specifically, the aims of this paper are:

 To identify definitional perspectives of big data analytics

 To distinguish the characteristics of big data within e-commerce

 To explore the types of big data within e-commerce

 To illustrate the business value of big data in e-commerce

 To provide guidelines for tackling the challenges of big data application within e-

commerce.

Overall, this paper intends to provide a thorough representation of the meaning of big data in the

e-commerce context. We have organized this paper into five main parts. Firstly, in section 2, we

explain the methodological gestalt and present the results of our systematic review. By collating

this information, in section 3, we then define the role of big data in e-commerce and identify
4
alternative definitional perspectives. Secondly, in section 4, we analyze the distinctive attributes

and types of big data within e-commerce. Thirdly, in section 5, we recommend different types of

business value that can be derived using BDA in the e-commerce domain. Finally, we identify

the challenges and provide solutions to tackle them in order to foster the growth of BDA in e-

commerce.

Table 1: Global growth in e-commerce and big data analytics (BDA)

Year Growth in the number of e- Growth in e-commerce sales Growth in big data analytics
commerce customers per customer worldwide (in (BDA) market worldwide (in
worldwide (in millions) US$) billions)

2011 792.6 1162 7.3

2012 903.6 1243 11.8

2013 1015.8 1318 18.6

2014 1124.3 1399 28.5

2015 1228.5 1459 38.4

2016 1321.4 1513 45.3

Source: Adapted from emarketer (2013) and (Piatetsky, 2014)

2. Research approach

The study was grounded in a literature review to identify and appraise the current knowledge on

the definitional aspects, attributes, types and business value of BDA in e-commerce. In defining

e-commerce, Kalakota and Whinston (1997) focused on four perspectives: online buying and

selling, technology driven business process, communication of information and customer

service. However, this definition does not provide adequate focus on transaction cost and other

aspects of e-commerce (e.g., B2B, B2G, C2C etc.) Thus, illuminating these critical aspects, Frost

and Strauss (2013) extends the definition focusing on buying and selling online, digital value
5
creation, virtual market places and storefronts and new distribution intermediaries. However, this

definition heavily focuses on e-marketing and fails to integrate other important e-business

processes. As such, this study puts forward a more holistic definition of e-commerce in big data

environment, which aims to achieve both transaction value (i.e., cost savings, improving

productivity and efficiency) and strategic value (i.e., competitive advantages, firm performance)

in digital markets by transforming production, inventory, innovation, risk, finance, knowledge,

relationship and human resource management with the help of analytics driven insights (Wixom

et al., 2013).

This study explores ‘big data’ in e-commerce environment, which refers to the huge quantities

of transaction, click-stream, voice, and video data in the e-commerce landscape (Davenport et

al., 2012). The study embraced a systematic approach to establish rigor throughout the review:

this was based on a similar approach used by Ngai and Wat (2002) and Vaithianathan (2010) in

e-commerce research and Benedettini and Neely (2012) in service systems research. The review

process adopted a protocol that described the criteria, scope, and methodology at each step. Due

to the subjective nature of the study, the systematic approach was adapted to the specific

objectives of the study. The study applied a scientific and transparent process throughout the

protocol in order to make the review process more precise and less biased.

The review process was driven by the following research question: what are the definitional

perspectives, distinctive characteristics, types, business value aspects and challenges of BDA in

e-commerce? These aspects of the research question guided the review process by correctly

identifying the subject areas, relevant studies, sources of materials, and the inclusion and

exclusion criteria. The review aimed to provide pragmatic solutions to the research question by

6
capturing concrete and meaningful aspects with the support of empirical evidence. Therefore,

major components of e-commerce (e.g., product development; operations; marketing, finance,

and human resources management; and information systems) were studied in relation to BDA

and business value. We have excluded disciplines which are not directly linked to our research

interests, such as biology, chemistry, geology, physics, or politics. As research on BDA is an

emerging field, a search within the time frame from 2006–2014 was considered to be

representative. We set the lower boundary at 2006 because in this year the first seminal paper

“competing on analytics” was published by Davenport (2006) in the Harvard Business Review

(cited >500 times). The systematic review of the study identified this paper as a trigger for

subsequent big data analytics research.

The study identified relevant publications by forming search strings that combined the key words

‘big data analytics*’ with a different range of terms and phrases. Using wildcard symbols, the

study reduced the number of search strings because, for example, ‘big data analytics*’ could

return hits for ‘big data analytic’ and ‘big data analysis’. Initially, the search focused on e-

commerce research as the source of material most relevant to the big data and analytics

experienced by e-commerce firms. The study conducted the database search combining the key

words ‘big data analytics’ with the terms ‘electronic commerce*’, ‘e-commerce*’, ‘big data

analytics* AND e-commerce*’, and ‘big data analytics* AND electronic commerce*’. Overall,

the study identified and submitted a total of 33 search strings to a panel of experts (n=10) from

different streams within e-commerce studies (i.e., marketing, operations management, strategic

management, human resources management, e- commerce and information systems). The panel

7
represented a team of experts consisting of an academic and an analytics practitioner from each

stream to validate the review protocol.

Our search started on November 01, 2014 and ended on December 20, 2014. The study reviewed

scholarly peer reviewed journals, periodicals, and quality web content by exploring five

databases: Scopus (Elsevier); Web of Knowledge (Thomson ISI); ABI/Inform Complete

(ProQuest); Business Source Complete (EBSCO Host); and Emerald, IEEE Xplore and

ScienceDirect (Taylor & Francis). In addition, a similar search was conducted within the

Association of Information Systems (AIS) basket of top journals. By adding the basket of top

journals, the study incorporated the key databases used by prior studies that had a similar

approach (Fosso Wamba et al., 2013; Lim et al., 2013b; Ngai et al., 2008; Ngai et al., 2009) as

well as important findings from leading information systems (IS) journals.

The searches were limited to the abstract field, with the exception of the Web of Knowledge

database in which the topic (i.e., abstract, title, and key words) was used. A total of 121 papers

were downloaded and reviewed. As the study’s focus was on capturing the maximum number of

views on BDA in e-commerce, a quality appraisal was established regarding the clarity of the

papers’ contributions to the research questions (Birnik and Bowman, 2007). At this stage, 32

papers were identified. A further seven papers were deemed relevant as they were clearly

focused on BDA in various sectors including e-commerce. Cross-referencing yielded five more

papers that were suitable for inclusion. At this stage, the study manually included four more

papers, yielding the final list of 48 papers. Overall, the criteria used to select each paper

contained an explicit or implicit indication of BDA in the e-commerce landscape.

8
We adopted a thematic analysis of the literature review (Ezzy, 2002) which was particularly

guided by Braun and Clarke (2006). The extensive review generated a set of 5 initial codes.

Although the open coding was informed by the codes derived from the literature review, the

coders were open to identify additional dimensions not currently present in the literature

(Spiggle, 1994). However, the coders established an initial correspondence between the literature

and the five identified categories (i.e., needs identification, market segmentation, decision

making and performance improvement, new product/market/business model innovation and

creating infrastructure and transparency). At this stage, to establish further rigor in content

analysis, we estimated Krippendorff's alpha (or, Kalpha), which is a robust reliability measure

irrespective of the number of observers, levels of measurement, sample sizes, and presence or

absence of missing data (Krippendorff, 2004, 2007). To estimate the Kalpha, first, each of the

subsamples of 48 articles were coded independently by two judges using a nominal scale ranging

from 1 to 5 (i.e., 1= needs identification, 2 = market segmentation, 3 = decision making and

performance improvement, 4 = new product/market/business model innovation, 5= creating

infrastructure and transparency). Second, we uploaded the coded data into IBM SPSS statistics

package (version 21) and conducted the analysis following the guidelines of Hayes (2011) and

De Swert (2012) to judge the inter-rater reliability of the coded variables (Hayes and

Krippendorff, 2007). Finally, the results provided us a decent Kalpha value of 0.82 which

exceeds the cut off value of 0.80 (De Swert, 2012), and provides us an adequate evidence of

reliability in content analysis.

The overall distribution of literature that covers 5 aspects of BDA in e-commerce is presented in

Table 2. It is worth noting that many articles appeared more than once as they captured multiple

aspects. Clearly, the vast majority of the publications were in the category of ‘decision making
9
and performance improvement’ (48 articles or 36% of all publications). Indeed, the ultimate

success of e-commerce depends on real time business decision making, which may be one

explanation for the high level of publications focused on this category. The study found that most

studies support the association between sophisticated analytics and robust decision making based

on actionable insights. For example, using robust analytics, LinkedIn made the decision to

introduce new features, such as ‘People You May Know’, ‘Jobs You May Be Interested In’,

‘Groups You May Like’, ‘Companies You May Want to Follow’ and achieved a 30% higher

click-through rate (Barton and Court, 2012). This was followed by ‘needs identification’ and

‘creating infrastructure and transparency’ with 24 articles for each category (or 18% for each

domain). ‘Needs identification’ refers to the identification of precise customer needs by

exploring big transaction data, whereas ‘infrastructure and transparency’ focuses on making

relevant information available through networks to make right time decisions. For instance,

Amazon’s recommendation engine generates ‘you might also want’ prompts to identify possible

needs of customers based on the analysis of transactions history and book views (Manyika et al.,

2011). As part of infrastructure and transparency, Google uses big data to refine core search and

ad-serving algorithms (Davenport and Patil, 2012). Similarly, Macys, an e-retailer in the US, has

developed an analytics infrastructure that can optimize pricing of 73 million items in just over

one hour (Davenport et al., 2012). Macy’s also analyzes data at the stock keeping unit (SKU)

level to ensure that products of different assortments are readily available. Finally, the review

identified ‘new product/market/business model innovation’ with 22 articles (or 17% of all

publications), and ‘market segmentation’ with 14 articles or 11% of all publications. For

example, Netflix Inc. created various customer segments (e.g., adventures, crime movies, family

features, movies on books etc.) by analysing over one billion reviews in categories such as liked,
10
loved, hated, etc. (Davenport and Harris, 2007b). Using a visualization and demand analytics

tool, Netflix introduced “House of Cards” program in the United States (USA) which is a huge

success as a new product (Ramaswamy, 2013). Overall, this study identifies these five broad

aspects in which organizations can create business value by harnessing big data analytics (see

Table 2).

11
 Table 2: Big data analytics (BDA) applications in e-commerce

BDA in References  %
E-commerce
Needs (McAfee and Brynjolfsson, 2012), (Bughin et al., 2010), (Brown et al., 2011), (LaValle et al., 2011), (Allen et al., 2012), 24 18%
identification (Ann Keller et al., 2012), (Beath et al., 2012), (Boja et al., 2012), (Boyd and Crawford, 2012), (Hsinchun et al., 2012),
(Demirkan and Delen, 2012), (Fisher et al., 2012), (Huwe, 2012), (Wagner, 2012),(Davenport et al., 2012), (Johnson,
2012b), (Tankard, 2012), (White, 2012b), (Bennett et al., 2013), (Minelli et al., 2013), (Lim et al., 2013a), (Constantiou
and Kallinikos, 2014), (Agarwal and Dhar, 2014), (Wixom et al., 2013)

(Bughin et al., 2010), (Ann Keller et al., 2012), (Beath et al., 2012), (Boyd and Crawford, 2012), (Demirkan and Delen, 14 11%
Market
2012), (Hsinchun et al., 2012), (Griffin, 2012), (Highfield, 2012), (Smith et al., 2012), (Davenport et al., 2012), (Tankard,
segmentation
2012), (Wagner, 2012), (Davenport and Harris, 2007b), (Wixom et al., 2013)

(Bughin et al., 2010), (Brown et al., 2011), (Bughin et al., 2011), (LaValle et al., 2011), (Hsinchun et al., 2012), (Boyd and 48 36%
Crawford, 2012), (Allen et al., 2012), (Ann Keller et al., 2012), (Boja et al., 2012), (Beath et al., 2012), (McAfee and
Brynjolfsson, 2012), (Demirkan and Delen, 2012), (Davenport et al., 2012) (Fisher et al., 2012), (Gehrke, 2012), (Griffin,
2012), (Griffin and Danson, 2012), (Huwe, 2012), (Johnson, 2012b), (Johnson, 2012a), (Lane, 2012), (Ohata and Kumar,
Decision making
2012), (Smith et al., 2012), (Tankard, 2012), (Wagner, 2012), (White, 2012b), (Bennett et al., 2013), (Koch, 2013),
and performance
(Rajpurohit, 2013), (Mithas et al., 2013), (Kung et al., 2013), (Dimon, 2013), (Minelli et al., 2013), (Davenport, 2006),
improvement
(Viaene and Van den Bunder, 2011), (Waller and Fawcett, 2013), (Goes, 2014), (George et al., 2014), (Constantiou and
Kallinikos, 2014), (Agarwal and Dhar, 2014; Agarwal and Weill, 2012), (Kiron et al., 2012a), (Kiron et al., 2014a),
(Mithas et al., 2013), (Wixom et al., 2013), (Mehra, 2013), (Kopp, 2013), (Miller, 2013)

New (Bughin et al., 2010), (Bughin et al., 2011), (LaValle et al., 2011), (Brown et al., 2011), (Ann Keller et al., 2012), (Beath et 22 17%
product/market al., 2012), (Boyd and Crawford, 2012), (McAfee and Brynjolfsson, 2012), (Hsinchun et al., 2012), (Demirkan and Delen,
/business model 2012), (Fisher et al., 2012), (Gehrke, 2012), (Griffin, 2012), (Griffin and Danson, 2012), (Huwe, 2012), (Johnson, 2012b),
innovations (Ohata and Kumar, 2012), (Tankard, 2012), (Wagner, 2012), (Kung et al., 2013), (Lim et al., 2013a), (Wixom et al., 2013)
Creating (McAfee and Brynjolfsson, 2012), (Brown et al., 2011), (Bughin et al., 2011), (LaValle et al., 2011), (Ann Keller et al., 24 18%
infrastructure and 2012), (Beath et al., 2012), (Boyd and Crawford, 2012), (Hsinchun et al., 2012), (Fisher et al., 2012), (Griffin, 2012),
transparency (Huwe, 2012), (Smith et al., 2012), (Tankard, 2012), (Wagner, 2012), (Zeng and Lusch, 2013), (Barton and Court, 2012),
(Waller and Fawcett, 2013), (Goes, 2014), (Constantiou and Kallinikos, 2014), (Agarwal and Dhar, 2014), (Kiron et al.,
2014a), (Mithas et al., 2013), (Wixom et al., 2013), (Leavitt, 2013)
Total 132 100%

Note: Some articles are counted more than once because they cover more than one type of BDA in e-commerce.

12
 3. Defining big data analytics in the e-commerce environment

E-commerce firms are one of the fastest groups of BDA adopters due to their need to stay on top

of their game (Koirala, 2012). In most cases, e-commerce firms deal with both structured and

unstructured data. Whereas structured data focuses on demographic data including name, age,

gender, date of birth, address, and preferences, unstructured data includes clicks, likes, links,

tweets, voices, etc. In the BDA environment, the challenge is to deal with both types of data in

order to generate meaningful insights to increase conversions. Schroeck et al. (2012) found that

the definition of big data incorporated various dimensions including: greater scope of

information; new kinds of data and analysis; real-time information; non-traditional forms of

media data; new technology-driven data; a large volume of data; the latest buzz word; and social

media data. In defining big data, IBM (2012), Johnson (2012a), and Davenport et al. (2012)

focused more on the variety of data sources, while other authors, such as Rouse (2011), Fisher et

al. (2012), Havens et al. (2012), and Jacobs (2009) emphasized the storage and analysis

requirements of dealing with big data. As defined by IDC (2013), big data focuses on three main

characteristics: the data itself, the analytics of the data, and the presentation of the results of the

analytics that allow the creation of business value in terms of new products or services. Overall,

the study defines big data in terms of five Vs: volume, velocity, variety, veracity, and value

(White, 2012). The ‘volume’ refers to the quantities of big data, which is increasing

exponentially. The ‘velocity’ is the speed of data collection, processing and analyzing in the real

time. The ‘variety’ refers to the different types of data collected in big data environment. The

‘veracity’ represents the reliability of data sources. And, finally, the ‘value’ represents the

13
transactional, strategic and informational benefits of big data (Fosso Wamba et al., 2015b;

Wixom et al., 2013).

The sheer volume of academic and industry research provides evidence on the importance of big

data in many functional areas of e-commerce including marketing, human resources

management, production and operation, and finance (Agarwal and Weill, 2012; Bose, 2009;

Davenport, 2006; Davenport, 2010, 2012; Davenport et al., 2012). In e-commerce, a large

amount of customer-related information is available simply when customers ‘sign in’: these data

are of great interest to business decision makers. While the significance of big data in making

strategic decisions is recognized and understood, there is still a lack of consensus on the

operational definition of big data analytics (BDA). It is thus prudent to analyze the definitions of

BDA mentioned in previous studies in order to identify their common themes. For example,

Davenport (2006) indicated that BDA refers to the quantitative analysis of big data with a view

to making business decisions. In addition, this decision-usefulness aspect of analytics has been

the focus in other studies such as those by Davenport and Harris (2007b), Davenport (2010), and

Bose (2009). Whereas Davenport and Harris (2007b) explained BDA with the help of

mechanisms such as statistical analysis and the use of an explanatory and predicting model, Bose

(2009, p.156) described BDA as the “group of tools” used to extract, interpret information as

well as predict the outcomes of decisions.

In defining BDA, one stream of research has focused on strategy-led analytics, or analytics that

create sustainable value for business. For example, LaValle et al. (2011) explained that the

application of business analytics (or the ability to use big data) for decision making must

essentially be connected with the organization’s strategy. Indeed, strategy-driven analytics has
14
received much attention due to its role in better decision making. Studies have also focused on

“competitive advantages” and “differentiation”, while applying analytics to analyze real-time

data (Schroeck et al., 2012). In a similar vein, Biesdorf et al. (2013) highlighted that it is

important to create an environment where big data, process optimization, frontline tools and

people are well-aligned in order to achieve competitive advantages.

The other stream of research defines BDA from the perspective of identifying new opportunities

with big data (see Appendix 1). For example, Davenport (2012) explained that BDA attempts to

explore new products and value-added activities. Similar arguments have also been offered in

another study by Davenport et al. (2012) in scanning the external environment and identifying

emerging events and opportunities. In addition, studies have also highlighted the role of

behavioral elements in the BDA definition (Agarwal and Weill, 2012; Ferguson, 2012), such as

empathy, which they believe to be essential in considerably enhancing the analytical ability of

firms. They explained BDA as being a combination of three things, that is, business processes,

technology optimization, and emotional connection with the use of data. In a similar spirit,

Ferguson (2012) stated that BDA refers to a multidimensional behavioral analysis that covers

both internal and external factors.

Overall, it is evident that statistical, contextual, quantitative, predictive, cognitive, and other

models are necessary prerequisites for big data analytics (BDA) (Kiron et al., 2012a). As such,

the study defines BDA in e-commerce as a holistic process that involves the collection, analysis,

use, and interpretation of data for various functional divisions with a view to gaining actionable

insights, creating business value, and establishing competitive advantage. While this definition

reflects the notion that analytical techniques can be used to produce actionable insights is rooted

15
in the origin of statistics traced back to the 18th century, the clear difference today is the vast

amount electronic transactions in the digital economy and its associated data deluge(Agarwal and

Dhar, 2014). From the transaction cost theory and the new institutional economics viewpoint

(Williamson, 1979, 1981, 2000), when it comes to economic performance of e-commerce firms

in the emerging data economy, institutional structure can play pivotal role in defining BDA. In

addition, relationship based e-commerce theories in terms of trust, loyalty and privacy (Dinev

and Hart, 2006; Gefen, 2000, 2002) or, classic information systems theories, such as IS success

(Delone, 2003; DeLone and McLean, 1992), IT quality (Wixom and Todd, 2005), IS continuance

(Bhattacherjee, 2001) and IT capability, sociomateriality and business value theories (Kim et al.,

2012) can be utilized in defining BDA based on the objectives and scope of the study. As a

result, there are clear opportunities for theoretical and practical inquiry to define BDA in a

particular e-commerce context ranging from marketing promotions, customer relationship to

supply chain management. By developing interesting research questions, this new frontier of data

science can create new knowledge and scientific possibilities by leveraging on data, technology,

analytics, business and society. Appendix 1 summarizes the definitional aspects and potential

research areas on BDA in e-commerce.

16
 4. Big data and their distinctive characteristics in the e-commerce
environment

The e-commerce landscape today is bubbling up with numerous big data that are being used to

solve business problems. According to Kauffman et al. (2012, p.85), the use of big data is

skyrocketing in e-commerce “due [to] the social networking, the internet, mobile telephony and

all kinds of new technologies that create and capture data”. With the help of cost-effective

storage and processing capacity, and cutting-edge analytical tools, big data now enable e-

commerce firms to reduce costs and generate benefits without any difficulty. However, analytics

that capture big data is different from traditional data in many respects. Specifically, owing to the

elements of their unique nature (i.e., voluminous, variety, velocity, and veracity), big data can be

easily distinguished from the traditional form of data used in analytics (see Appendix 2). The

next sections discuss these elements in turn, along with their implications for e-commerce.

4.1 Voluminous

With the emergence of web technologies, there is an ever-increasing growth in the amount of big

data in the e-commerce environment (Beath et al., 2012). These mass quantities of data that e-

commerce firms are trying to harness to improve their decision-making process are defined as

voluminous (McAfee and Brynjolfsson, 2012). As illustrated by Russom (2011), BDA takes a

large volume of data that require a massive amount of storage and entail a large number of

records. In fact, BDA encompasses large volumes of data (commonly expressed in petabytes and

exabytes) that are used by decision makers for making strategic decisions. Data collected in the

big data environment are often unstructured and can incorporate video, image, or data generated
17
from mobile technology. As such, it is unlikely that big data will be clean and free from any

errors. While this poses an extra challenge for decision makers to get data ready for use, big data

enable real-time decision making for e-commerce firms (Kang et al., 2003). For example, using

the massive amount of structured and unstructured data, Amazon developed sophisticated

recommendation engines that deliver over 35 percent of all sales, automated customer service

systems to ensure superior customer satisfaction and dynamic pricing systems that adjust pricing

against competing sites every 15 seconds (Goff et al., 2012). Similarly, Netflix, the online

movie retailer, analyzes over 1 billion reviews to determine the customer’s movie tastes and

inventory conditions (Davenport and Harris, 2007b). Many e-commerce firms (e.g., Amazon,

eBay, Expedia, Travelocity) use massive volume of social media data (e.g., photos, notes, blog

posts, web links, and news stories) to tap into the opportunity of real time promotional offers

(Manyika et al., 2011). In addition to opportunities, the volume of big data brings challenges,

especially integration of big data from different sources and formats, introducing new “agile”

analytical methods and machine-learning techniques, and increasing the speed of data processing

and analysis. As such, E-commerce firms must have the ability to embed analytics and

optimization into their operational and decision processes to enhance their speed and impact

(Davenport, 2013a).

4.1 Variety
The word ‘variety’ denotes the fact that big data originate from numerous sources which can be

structured, semi-structured or unstructured (Schroeck et al., 2012). Variety is another critical

attribute of big data as they are generated from a wide variety of sources and formats including

text, web, tweet, audio, video, click-stream, log files, etc. (Russom, 2011). This variety of data

requires the use of different analytical and predictive models which can enable information about
18
different functional areas to be used. Biesdorf et al. (2013) explained, for example, that the

analytic model used by e-commerce firms could comprise a variety of customer information,

such as: customer profiles and historical data on buying behavior; regional and seasonal buying

patterns; optimizing of supply chain operations; and, above all, the retrieval of any unstructured

data from social media to predict buying by product, store, and advertising activities. For

example, Manyika et al. (2011) showed that an e-retailer provided real-time responses in

marketing campaigns, amending them as and when necessary by conducting sentiment analysis.

Overall, the variety of big data has the potential to add business value to firms. However, top

management commitment in terms of improving business processes and defining workflows is

very significant in order for the benefits from such data to be realized (Beath et al., 2012).

4.2 Velocity

Velocity refers to the frequency of data generation and/or the frequency of data delivery

(Russom, 2011). It is important to understand the velocity of big data which needs to be

prioritized and synced into business processes, decision making and improvements in

performance (Beulke, 2011). As described by Gentile (2012), the term ‘velocity’ is the rate of

change in big data and how quickly big data should be used in business decisions in order to add

value. In fact, given that greater data velocity is assured, data have the potential to open up new

opportunities for organizations. As shown by Davenport and Patil (2012), the high velocity of

BDA can enable analysts to conduct consumer sentiment analysis and provide a clear picture

about choices of brands and/or products.

To capitalize on this high pace of data, many e-commerce firms have used various techniques to

add value to their business. For example, Amazon has been able to maintain a constant flow of
19
new products by right-time communication with its stakeholders (Davenport, 2006). eBay Inc.

has performed thousands of experiments using data velocity with different aspects of its website,

which has resulted in better layout and website features ranging from navigation to the size of its

images (Bragge et al., 2012). To utilize the high velocity of data, many e-commerce firms now

use sophisticated systems to capture, store, and analyze the data to make real-time decisions and

retain their competitive advantages.

4.3 Veracity

Another essential attribute of big data relates to the uncertainty associated with certain types of

data. These data demand rigorous verification, requiring full compliance with quality and

security issues. High data quality is an important requirement of BDA for better predictability in

the e-commerce environment (Schroeck et al., 2012). Therefore, verification is necessary to

generate authenticated and relevant data, and to have the capability to screen out bad data

(Beulke, 2011). In fact, verification is essential in the data management process because the

existence of bad data might hinder management in making cognizant decisions. Likewise, bad

data would have little relevance in adding business value. Beulke (2011) explained that the

information technology (IT) units of e-businesses can play a key role in this regard by setting up

an automatic verification system so that the big data used for business decisions have been

authenticated and have passed through strict quality compliance procedures.

In this regard, Schroeck et al. (2012) argued for the use of data fusion which combines various

less reliable data sources in order to create a more precise and worthwhile data point (such as

social comments affixed to geospatial location information). Ferguson (2012) highlighted that

Montage Analytics has developed a tool which is particularly useful for predicting ‘black
20
swans1’ in organizations, and any other types of risk that have originated as a result of human

manners and motivations. The reason is that the inherent unpredictability of some data is always

caused by factors, such as technology failure, human lack of truthfulness and economic factors.

5. Types of big data used in e-commerce

E-commerce refers to the online transactions: selling goods and services on the internet, either in

one transaction (e.g., Amazon, Zappos, eBay, Expedia) or through an ongoing transaction (e.g.,

Netflix, Match.com, LinkedIn etc.) (Frost and Strauss, 2013). E-commerce firms ranging from

Amazon to Netflix capture various types of data (e.g., orders, baskets, visits, users, referring

links, keywords, catalogues browsing, social data), which can be broadly classified into four

categories: (a) transaction or business activity data (b) click-stream data (c) video data and (d)

voice data (see Appendix 3). In e-commerce, data are the key to track consumer shopping

behaviour to personalize offers, which are collected over time using consumer browsing and

transactional points. This section discusses different types of big data along with their

implications for e-commerce.

5.1 Transaction or business activity data

Transaction or business activity data evolve as a result of exchanges between the customer and

company over time. These data are structured in nature and originate from many sources ranging

from customer relationship programs (e.g., customer profiles maintained by the company, the

1
 A ‘black swan’ is also known as an extreme outlier: it is basically the disproportionate quality of a high-impact, hard-to-predict,
rare event that, in general terms, people do not predict to happen, an event that is beyond the scope of detection by traditional
analytics (Ferguson, 2012).
21
occurrence of customer complaints) through to sales transactions. A recent study by

Chandrasekaran et al. (2013) provided the example of an e-retailer that analyzes data from its

loyalty program (i.e., its Clubcard loyalty program), entailing 1.6 billion data points, 10 million

customers, 50,000 stock keeping units (SKUs), and 700 stores, which has resulted in the

thorough coordination of big data with consumer insights. In the context of e-retailing, Kiron et

al. (2014b) reported that StyleSeek, the online recommendation engine in the US, makes massive

revenue by analyzing customers’ tastes and preferences and driving consumers toward its retail

partners with the help a sophisticated analytics platform. Overall, it is evident that e-retailers

can derive numerous benefits across the value chain using transaction data.

5.2 Click-stream data

Click-stream data originate from the web and online advertisements, and from social media

content such as the tweets, blogs, Facebook wall postings, etc. of e-commerce businesses. In

today’s connected environment, social media and online advertisements play a key role in the

ongoing promotional strategy of firms, such as the use of click-stream data that are very

important for management in making informed, strategic, and tactical decisions. Earlier studies

have found that many e-commerce firms worldwide (e.g., Amazon, eBay, Zappos, Alibaba etc.)

rely on click-stream data in their efforts to capture data. Click-stream data can be applied to

predict customer preferences and tastes. As highlighted by Davenport and Harris (2007a),

Netflix, a world-famous internet TV network, captures and analyzes more than one billion web

data related to reviews of movies that are liked, loved, hated, etc. in order to understand

customers’ tastes.

22
Another recent study by Davenport et al. (2012) reported that credit card firms, through relying

on website and call center data, maintain databases (named as ready-to-market) to offer

customer-tailored products within milliseconds and also optimize offers by following up

responses from customers. Some companies use such databases not only to approach customers

but also to offer online services. For example, Biesdorf et al. (2013) explained that by analyzing

web data, e-retailers receive a red flag alert when the prices of their competitors’ products are

below their own price level. Therefore, retailers can adjust their prices to remain competitive.

5.3 Video data

Video data are live data that come from capturing live images. Currently, e-commerce firms are

keen to use not only either click-stream data or transaction data but, in association with image

analysis software, they tend to also capture video data. As indicated by Schroeck et al. (2012), e-

commerce firms have the necessary competencies to analyze extremely unstructured data, such

as video or voice data. These data have the potential to add value for e-commerce firms. For

example, Ramaswamy (2013) reported that Netflix uses video data to predict viewing habits and

evaluate the quality of experiences. In addition, the visualization and demand analytics tool

based on the type of movie consumption help Netflix understand preferences, which led them to

achieve success in their “House of Cards” program in the US. Thus, the use of video data is

essential for firms in making better decisions than their competitors.

5.4 Voice data

Another type of data attached to the big data family is voice data, that is, data typically

originating from phone calls, call centers, or customer service. As evidenced in recent research,

voice data are advantageous for analyzing consumer-buying behavior or targeting new
23
customers. As described by Davenport et al. (2012), credit card companies, for example

American Express, use and track data related to call center activities so that personalized offers

can be given in milliseconds. In Schroeck et al.’s (2012) survey, e-commerce firms were found

to use advanced capabilities to analyze text and transcripts converted from call center

conversations. In addition, numerous nuances of language, such as sentiment, slang and

intentions, can be read and recognized by means of BDA in the context of e-commerce.

Since the nature and type of big data are unique and coming from various networks of digital

platforms, there is possibility of new theory enquiring new problems. The data economy also

indicates that big data are “relational” and “networked”, which necessitate new developments in

IT capability and algorithms, system and data quality, privacy and ethical implications, strategic

alignment and corporate culture.

6. Business value of big data analytics for e-commerce firms

The ultimate challenge of BDA is to generate business value from this explosion of big data

(Beath et al., 2012). The term ‘value’ in the context of big data implies the generation of

economically worthy insights and/or benefits by analyzing big data through extraction and

transformation. Aligned with Wixom et al. (2013), we define business value of BDA as the

transactional, informational and strategic benefits for the e-commerce firms. Whereas

transactional value focuses on improving efficiency and cutting costs, informational value sheds

light on real time decision making and strategic value deals with gaining competitive advantages.

For example, by injecting analytics into e-commerce, managers could derive overall business

24
value by serving customer needs (79%); creating new products and services (70%); expanding

into new markets (72%); and increasing sales and revenue (76%) (Columbus, 2014). Table 3

shows that many e-commerce firms worldwide are able to enhance business value in the form of

transactional, informational and strategic benefits by using big data analytics.

Amazon, the online retailer giant, is a classic example of enhancing business value and firm

performance using big data. Indeed, the firm was able to generate about 30% of its sales through

analytics (e.g., through its recommendation engine) (The Economist, 2011). Similarly, Kiron et

al. (2012b) reported that Match.com was able to earn over 50% increase in revenue in the past

two years while the company subscriber base for its core business reached 1.8 million. The IBM

case study (IBM, 2012) illustrated that greater data sharing and analytics could improve patient

outcomes. For example, Premier Healthcare Alliance was able to reduce expenditure by US$2.85

billion. Schroeck et al. (2012) found that Automercados Plaza’s grocery chain was able to earn a

nearly 30% rise in revenue and a total of US$7 million increase in profitability each year by

implementing information integration throughout the organization. Furthermore, the company

avoided losses on over 30% of its products by scheduling price reductions to sell perishable

products on time. In addition to adding value for business in financial terms, the use of big data

can add benefit in non-financial parameters such as customer satisfaction, customer retention, or

improving business processes. As presented by Davenport (2006), United Parcel Service (UPS)

examines usage patterns and complaints data to accurately predict customer defections. This

process has resulted in a significant increase in customer retention for the firm. In the similar

spirit, LaValle et al. (2011) reported that an online automobile company was able to develop

accurate customer retention strategies by creating a customer sample from big data followed by

25
applying analytic algorithms to forecast attrition probabilities, coupled with identifying at-risk

customers. This retention strategy consequently has opened up prospects for the firm to yield

hundreds of millions of dollars merely from a single brand. Because e-commerce firms have

opportunities to interact in real time with customers more frequently than firms that do not have

an e-commerce platform, they need to use big data for various purposes. Therefore, drawing on

the relevant theories in e-commerce (see Table 4), we present six mechanisms to enhance

practical business values in data economy as follows.

6.1 Personalization

The first application of big data for e-commerce firms is the provision of personalized service or

customized products (Koutsabasis et al., 2008). Studies have argued that consumers typically

like to shop with the same retailer using diverse channels, and that big data from these diverse

channels can be personalized in real time (Kopp, 2013; Mehra, 2013; Miller, 2013). Real-time

data analytics enables firms to offer personalized services comprising special content and

promotions to customers. In addition, these personalized services assist firms to separate loyal

customers from new customers and to make promotional offers accordingly (Mehra, 2013).

According to Liebowitz (2013), personalization can increase sales by 10% or more and provide

five to eight times the ROI on marketing expenditures. Bloomspot, in this regard, explored

customer credit card data to track the spending records of the most loyal customers and to offer

them rewards via follow-up offers and benefits which assisted in increasing customer loyalty

(Miller, 2013). Wine.com achieved a massive increase in their sales using personalized email

marketing (Zhao, 2013). Bikeberry.com is an example of an e-commerce firm that is now

leveraging BDA (e.g., using data from customers’ browsing patterns, login counts, past

26
purchases) to send each customer a tailored offer: this has led to a sales increase of 133% and

user on-site engagement increase of approximately 200% (Jao, 2013).

6.2 Dynamic pricing

In today’s extremely competitive market environment, customers are considered ‘king’.

Therefore, to attract new customers, e-commerce firms must be active and vibrant while setting a

competitive price (Kung et al., 2013). Amazon.com’s dynamic pricing system monitors

competing prices and alerts Amazon every 15 seconds, which has resulted in a 35% increase in

all sales. To offer competitive prices to customers on the eve of possible increases in sales (such

as at Christmas or other festive times), Amazon processes big data by taking into account

competitors’ pricing, product sales, actions of customers, and any regional or geographical

preferences (Kopp, 2013). Access to this information through the use of big data is likely to

enable e-commerce firms to establish dynamic pricing (Leloup and Deveaux, 2001).

6.3 Customer service

Another key area in which e-commerce firms can use big data is customer service. Customer

grievances communicated by means of contact forms in online stores together with tweeting

enable e-commerce firms to make customers feel valued when they call the service center

resulting in prompt service delivery (Mehra, 2013). Similarly, Miller (Miller, 2013) explained

that, by offering proactive maintenance (i.e., taking preventive measures before a failure takes

place or is even detected) using big data obtained from sensors rooted in products, e-commerce

firms are able to offer innovative after-sales service.

27
 6.4 Supply chain visibility

When customers place an order on an online platform, it is logical for them to expect that

companies would provide the service of tracking the order while the goods are still in transit.

Kopp (2013) explained that customers expect key information, such as the exact availability,

current status, and location of their orders. E-commerce firms often face difficulty in addressing

these expectations from customers as various third parties such as warehousing and

transportation are involved in the supply chain process (Kopp, 2013). Big data analytics (BDA)

plays a key role in this context by collecting multiple information from multiple parties on

multiple products (Mehra, 2013), and subsequently precisely advises the expected delivery date

to customers.

6.5 Security and fraud detection

Fraud-related losses, on average, amount to US$9,000 for every US$1 million in revenue

(Mehra, 2013). This significant amount of loss can be prevented by identifying relevant insights

through the use of big data. With the help of the right infrastructure, such as Hadoop, e-

commerce firms can analyze data at an aggregated level to identify fraud relating to credit cards,

product returns and identity theft (Mehra, 2013). In addition, e-commerce firms are able to

identify fraud in real time by combining transaction data with customers’ purchase history, web

logs, social feed, and geospatial location data from smartphone apps. For example, Visa has

installed a big data-enabled fraud management system that allows the inspection of 500 different

aspects of a transaction, with this system saving US$2 billion in potential losses annually.

28
 6.6 Predictive analytics

Predictive analytics refers to the identification of events before they take place through the use of

big data (Kopp, 2013). The application of predictive analytics depends on robust data mining

(Cherif and Grant, 2013). In this context, Loveman (2003), CEO and President of Caesar’s

Entertainment, stated that: “[t]he best way to engage in … data-driven marketing is to gather

more and more specific information about customer preferences, run experiments and analyses

on the new data, and determine ways of appealing to [casino game] players’ interests. We

realized that the information in our database, coupled with decision science tools that enabled us

to predict individual customer’s theoretical value to us, would allow us to create marketing

interventions that profitably addressed players’ unique preferences.” Therefore, predictive

analytics helps firms to prepare their revenue budgets. The preparation of these budgets assists e-

commerce firms to recognize future sales patterns from past sales data (e.g., yearly or quarterly).

This, in turn, helps firms to better forecast and determine inventory requirements, thus leading to

the avoidance of product stockouts and lost customers (Mehra, 2013). Similarly, the application

of a visualization and demand analytics tool at Netflix helped in the accurate prediction of

consumer behavior and preferences when airing the “House of Cards” program in the United

States (USA) (Ramaswamy, 2013).

E-commerce firms increasingly extract business value from BDA insights either to solve

business problems or make decisions. This new development in the realm of data driven e-

commerce triggers development of new theories in the context of tangible (e.g., productivity

improvement) and intangible (e.g., strategic business understanding) business value using

people, process and technology. For example, Wixom et al. (2013) identified ‘drivers of

pervasive use’ and ‘drivers of speed to insight’ as new constructs for possible theoretical
29
extension in BDA adoption and value. In the similar spirit, Fosso Wamba et al. (2015a)

highlighted transactional, strategic and transformative business values of BDA as fertile grounds

for knowledge creation. Also, Sharma et al. (2014) put forward new research questions

exploring the roles of resource allocation and resource orchestration processes in organizations in

order to gain a deeper understanding of how BDA influences business value. Similar arguments

have been put forward by Beath et al. (2012) to explore BDA and business value in practice to

capitalize on the current opportunities of big data. Overall, we suggest conducting innovative,

non-traditional research in electronic markets that leverages the power of big data towards theory

building in the form of capturing novel social and economic activity.

30
 Table 3: Business value of big data analytics (BDA) in e-commerce
Study E-Commerce Functions
Davenport (2006) Personalization (e.g., CRM)
Dynamic pricing
Customer service (e.g.,
service quality)
Predictive analytics
Supply chain visibility
Predictive analytics (e.g.,
churn)
Manyika et al. (2011) Predictive analytics (e.g.,
market share analysis)
Personalization (e.g., direct
marketing, relationship
marketing)
Predictive and cluster
analytics (e.g., segmentation,
customer profitability).
Personalization
(email marketing)
Personalization
(customized service offerings)
(Davenport and Harris, Dynamic Pricing
2007b)
Description Firm(s)
Identify customers with the greatest profit potential, loyalty, Harrah’s, Capital One,
and service. Increase likelihood that they will want the Barclays
product or service offering, retain their loyalty.
Identify the price that will maximize yield or profit. Progressive, Marriott
Detect quality problems early and minimize them. Honda, Intel
Fine tuning global promotions for every medium in every Dell (DDB Matrix)
region.
Analysts from such functions as operations and supply chain Procter & Gamble (P&G)
to improve total business performance by analyzing
interrelationships among functional areas.
Customer Intelligence Group examines usage patterns and United Parcel Service
complaints data to accurately predict customer defections. (UPS)
Use of big data to capture market share from local Tesco
competitors.
Recommendation engine to generate ‘you might also want’ Amazon.com
prompts to generate sales.
Developed behavioral segmentation and a multi-tier Neiman Marcus
membership reward program by analyzing customer
profiles, real-time changes in customer behavior, and
customer profitability.
Integrated customer databases with information on some Williams-Sonoma
60 million households to improve the response rate of email
marketing.
Compiled detailed holistic customer profiles, and conduct Harrah’s, Progressive
experiments and segment their customers systematically and Insurance, Capital One
effectively to personalize product offers and increase
customer loyalty.
Deriving the most accurate pricing of products and services Royal Bank of Canada
with precise calculation of customer profitability.
31
 Customer choice preferences
and product offerings
(LaValle et al., 2011) Predictive analytics (data-
driven customer insights)
(Davenport et al., 2012) Dynamic pricing
(Kiron et al., 2012a) Customer service (e.g.,
service innovation)
Security and fraud detection
(Schroeck et al., 2012) Dynamic pricing
(Chandrasekaran et al., Cluster and predictive
2013) analytics (segmentation)
New product acceptance rate
(Davenport and Patil, (a) core search
2012) (b) advertisements
Product, feature (e.g., ‘people
you may know’) and value-
adding service
(Liebowitz, 2013) Product management
Analyzes customer choice and customer feedback from over Netflix
one billion reviews.
Collected 80–90% of the information possibly needed about Best Buy
customers to generate analytics-driven customer insights.
Is able to optimize pricing of 73 million items in just over Macys.com
one hour.
Uses personal profiles and psychology-based analytics to Match.com
help people connect and enter into a loving relationship.
Each new PayPal initiative across finance, operations, and PayPal
products is examined with quantified impact and leveraging
analytics.
Scheduling price reductions to sell perishable products Automercados Plaza’s
before they spoil.
Systematically integrates analytics and consumer insights Tesco
using data from its Clubcard loyalty program to better
segment and target customer occasions.
Simulates new products placed on shelves in order to test Procter & Gamble (P&G)
design effects internally and with consumers in order to
enhance product acceptability after launching.
Uses BDA to refine core search and ad-serving algorithms. Google
Uses BDA to generate ideas for products, features, and LinkedIn
value-added services. By using ‘people you may know’,
LinkedIn generated millions of new page views which
resulted in LinkedIn’s growth trajectory shifting
significantly upward.
Macy’s analyzes data at the stock keeping unit (SKU) level Macys.com
to ensure that it has readily available assortments of
products.
32
 7. Discussion and future research agenda

While the use of big data tends to add value for business throughout the entire value chain, there

are a few challenges that organizations should confront and resolve before pay-offs from big data

will flow into their business. Indeed, any innovative way of performing jobs always brings

challenges: big data is no exception to this reality. Many researchers have argued that, while big

data have great potential to improve business performance/add value, decision makers need to

address various business challenges in order to reap the benefits (Davenport, 2012; Schroeck et

al., 2012; Shah et al., 2012). As shown in Table 4, the current study highlights some of these

challenges with theoretical and practical implications, thus laying the ground for potential

research on BDA in the e-commerce landscape.

One of the biggest challenges in the big data environment is that it does not give clear direction

on how to reach business targets by aligning with the existing organizational culture and

capabilities (Kiron et al., 2014a). In this regard, Barton (2012) highlighted that the key challenge

for managers is to make big data trustworthy and understandable to frontline employees, with the

example that frontline employees are typically reluctant to use big data as they either did not

trust a big data-based model or did not have the capabilities to understand how it worked.

Therefore, in the process of gaining greater acceptance by employees and other end-users,

managers should present big data in an understandable format such as through a dashboard,

reports or a visualization system (Bose, 2009). Indeed, an innovative capability always leads

toward sustained long-term advantages (Porter and Millar, 1985) and superior firm performance

through the characteristics of rarity, appropriability, non-reproducibility, and non-substitutability

33
(Barney, 1991). Therefore, the required training, discussion with relevant employees and

managers, the active role of top management (a leader), and incentives could work as catalysts to

facilitate the adoption by employees and managers of big data (Kiron et al., 2014a). In this

regard, McAfee and Brynjolfsson (2012) argued that it is very unlikely for a firm to be a top

performer through the use of big data unless there is a clear goal and strategy in place.

Marketing within e-commerce firms is grappling with the massive amount of data arriving

through multiple channels. Therefore, the biggest challenge is to find the right information about

each customer from the large amount of data (Agarwal and Dhar, 2014; Miller, 2013). This huge

amount of data empowers customers more than ever before and creates an opportunity for

marketers to establish relationship in e-commerce based on trust and loyalty (Gefen, 2000,

2002). Although organizations such as Facebook, Google, and Twitter have an enormous amount

of person-specific information, the challenge is how they and other e-commerce firms can inject

BDA into marketing practices to create personalized offers, set dynamic prices, and use the right

channels to provide consumer value. In addition to marketing, it is also important to process big

data in production and operations management using sophisticated database management tools.

In relation to e-commerce, big data advocates argue for the integration of talent, technology and

information to reduce overall transaction costs (Williamson, 1979, 1981). In this regard, Chang

et al. (2014, p.12) stated that: “[s]ince big data are now everywhere and most firms can acquire

it, the key to competitive advantage is to accelerate managerial decision-making by providing

managers with implementable guidelines for the application of data analytics skills in their

business processes”.

34
 Table 4: Future research questions for big data analytics (BDA) in e-commerce
E-Commerce research Relevant theories Future Research Questions for BDA in E-Commerce
streams

Strategy, culture, Resource based theory (Barney,  How can organizations better incorporate functional differences into their big data strategy in order to
leadership, and 1991), Competitive strategy develop a big data-oriented culture?
organization (Porter and Millar, 1985)  How can organizations ensure business alignment, business process transformation, and strategic analytics in
the big data environment?

Marketing and sales Market orientation theory (Kohli
and Jaworski, 1990; Narver and
Slater, 1990), relationship theory
in e-commerce (Gefen, 2000,
2002), consumer value
(Holbrook, 1999)
 What factors influence the consumer-perceived value of big data?
 What offerings generate more profit and which segments are more attractive?
 How can pricing be customized for the individual customer?
 Factors influencing trust and loyalty of customers in e-commerce?

Production and Transaction cost theory  What is the impact of big data on lean operations, quality management, and supply chain management?
operations (Williamson, 1979, 1981)  How can organizations better use insights from big data to achieve operational excellence?
management  What is the impact of big data on the operations of e-commerce in various sectors (e.g., healthcare, retail
industry, and manufacturing)?

Data quality, IT IT quality theory (Nelson et al.,  What factors influence data cost, quality, retention, visualization, governance, security, and privacy?
infrastructure, and 2005), IS success theory  How can an e-commerce firm combine all channels to generate, acquire, transform, and integrate big data?
security (Delone, 2003; DeLone and  What types of contracts can allow firms to use big data for legitimate purposes?
McLean, 1992), Sociomateriality  What are the BDA capability dimensions for e-commerce firms?
of IT (Orlikowski, 2007)  How can a firm leverage big data sources and cloud-based architecture to produce insight and business
value?
 Do privacy and security concerns have any impact on customers?

Human resources/talent Resource based theory (Barney,  What factors influence the selection and retention of data scientists?
management 1991)  What types of training improve the skills and engagement of employees at all levels to deal with big data?

Overarching value IT business value (Melville et al.,
2004), business value of
analytics (Wixom et al., 2013)
 How do business analytics and organizational decision making process influence each other and what are
their joint effects on firm performance?
 How does big data adoption and implementation vary by firm types in the e-commerce industry?
 How do organizations capitalize on big data at their disposal and extract value?
 What factors influence the data life cycle in the e-commerce industry? What are their implications at
different stages?

35
The availability of good quality big data is the key to adding value to the organization (Kiron

et al., 2014a). Poor quality data might arise from redundant applications and databases, which

add to data storage costs and make data more difficult to access and use (Beath et al., 2012).

Although big data can be leveraged to improve business value, there is always the risk of

redundant, inaccurate, and duplicate data which might undermine he decision-making process

(Nelson et al., 2005). As argued by Schroeck et al. (2012), poor data quality or ineffective

data governance is a key challenge for BDA. It is noteworthy that the use of even the most

sophisticated analytics would be meaningless if inappropriate data are in place or poor quality

data are used (Bose, 2009).

In addition to good quality data, the safe handling of individual and organizational privacy

and data security (e.g., names and addresses, social security numbers, credit card numbers,

and financial information) could possibly be another challenge for big data management

(Bose, 2009; Smith and Shao, 2007). Although the unprecedented growth in BDA makes it

alluring to use data without consent, that non-consenting respondents might jeopardise the

advancement in research. As such, informed consent is a big challenge in big data

environment (Bialobrzeski et al., 2012). Indeed, informed consent process need to be

streamlined in BDA by embracing flexible, refined, simplified but informative consent

process (Beskow et al., 2010; Ioannidis, 2013; White, 2012a) to encourage participatory

community research (Bouhaddou et al., 2011). Undoubtedly, big data provides actionable

insights for e-commerce firms, however, it creates a “privacy paradox” because consumers,

on the one hand, want to protect their privacy and on the other hand, they regularly trade their

personal information for free apps, promotional offers and social media incentives (Hull,

2014). In this case, Nunan and Di Domenico (2013,p.6) claim that “while privacy concerns

have been raised over the use and creation of big data, these have been outpaced by

Electronic Markets - The International Journal on Networked Business Grimmaische Str. 12

Editorial Office: 04109 Leipzig, Germany
c/o Information Systems Institute Fax: +49 (341) 9733 612
www.electronicmarkets.org University of Leipzig, Germany editors@electronicmarkets.org
individuals’ use of social networks”. Although consumers increasingly share personal

information in e-commerce sites or in social networks, it is expected for firms not to breach

consumers’ privacy because consumers disclose information expecting it to be confidential

under ‘terms of use’(Martin, 2015). Despite consumers’ expectations for anonymous data to

protect their privacy, the extant review on BDA identifies a new wave technologies and tools

(e.g., facial recognition software) to de-anonymize and re-identify people in data economy. It

raises serious concerns on the use of so called big public data (Boyd and Crawford, 2012). As

a result, there is an urgent research call to protect privacy both technologically and legally in

the era of biometric and genomic big data research (Kaplan, 2014).

In addition to privacy, big data creates serious security challenges as consumers are

completely unaware of how their data are being used by whom and for what purposes. In this

context, Vaidhyanathan and Bulock (2014) raised question on the validity of monitoring

buying behaviour online and the extent to which consumers are knowledgeable and aware of

this sort of monitoring. Firms within big data industry are often involved in creating an

aggregated negative externality because they jointly contribute to the development of a large

system of surveillance (Martin, 2015). Any such surveillance and potential revelations (e.g.,

Edward Snowden’s revelation of PRISM program and its involvement with big corporations-

Yahoo, Google, Facebook, Microsoft, Apple etc.) call attention to the security of private

information (Bankston and Soltani, 2014; Schneier, 2013). In this context, Google has

recently introduced “the right to be forgotten” policy in the European Union, which allows an

individual to remove irrelevant personal data from its search results. The realm of big data-

sharing agreements still remains informal, poorly structured, manually enforced, and linked to

isolated transactions (George et al., 2014; Pantelis and Aija, 2013). Thus, to succeed in the

37
emerging big data environment, e-commerce firms need to be responsible to handle autonomy

and informed consent and ensure privacy and security of data.

Another key challenge of the big data environment is to find the skills, such as technical,

analytical, and governance skills as well as the networked relationships needed to

operationalize big data (Davenport et al., 2012; Kiron et al., 2014a; Schroeck et al., 2012).

However, it is not easy to find all these skills in one person. As argued by McAfee and

Brynjolfsson (2012) and Kiron et al. (2014a), the enormous amount of big data needs to be

captured, integrated, cleaned, and visualized; therefore, the technical and analytical skills of

the data scientist (e.g., statistical, contextual, quantitative, predictive, and cognitive skills, and

other related knowledge) are critical. In addition, these scientists should be conversant with

business and governance issues, and should have the skills to communicate in the language of

business. According to the sociomaterialism theory in IT (Orlikowski and Scott, 2008),

organizational (i.e., BDA management), technological (i.e., IT infrastructure), and talent (e.g.,

analytics skill or knowledge) dimensions of analytics are so interwoven that it is difficult to

measure their individual contribution in isolation (Orlikowski and Scott, 2008). Therefore, it

is essential to develop big data analytics capability focusing on sophisticated technology,

robust talent and analytics driven management culture.

Overall, the lack of organizational ability to articulate a solid and compelling business case is

likely to be an overarching challenge for BDA in e-commerce. Both in academia and practice,

researchers (e.g., Hayashi, 2014; Kiron et al., 2014b; Wamba et al., 2015) reported that a

fascinating case for business opportunities with measureable benefits is the key challenge of

big data. As most organizations are facing the dilemma of how to use big data, we advise that

the first step is to spend time in creating a simple plan for how data, analytics, frontline tools,

and people can come together to create business value (Biesdorf et al., 2013). Specifically, in
38
a similar spirit with Davenport (2013b), we suggest developing a research blueprint by

recognizing the problem, reviewing past findings, identifying the variables and developing the

model, collecting and analyzing the data and making decisions on actionable insights. Overall,

there is wealth of possibilities to address exciting, non-trivial questions in e-commerce and we

offer some illustrations in Table 4 focusing on specific research streams. However, the

assessment of exciting, blue ocean research question in e-commerce should be based on fit,

rigor, story, theory and economic and social significance.

8. Conclusion

Big data analytics (BDA) has emerged as the new frontier of innovation and competition in

the wide spectrum of the e-commerce landscape due to the challenges and opportunities

created by the information revolution. Big data analytics (BDA) increasingly provides value

to e-commerce firms by using the dynamics of people, processes, and technologies to

transform data into insights for robust decision making and solutions to business problems.

This is a holistic process which deals with data, sources, skills, and systems in order to create

a competitive advantage. Leading e-commerce firms such as Google, Amazon, and Facebook

have already embraced BDA and experienced enormous growth. Through its systematic

review and creation of taxonomy of the key aspects of BDA, this study presents a useful

starting point for the application of BDA in emerging e-commerce research. The study

presents an approach for encapsulating all the best practices that build and shape BDA

capabilities. In addition, the study reflects that once BDA and its scope are well defined;

distinctive characteristics and types of big data are well understood; and challenges are

properly addressed, the BDA application will maximize business value through facilitating

the pervasive usage and speedy delivery of insights across organizations.

39
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 Appendix 1: Definitional aspects of big data analytics (BDA) in e-commerce

Study Potential research areas Definition Purpose

Davenport (2006) E-commerce functions: production and operations BDA refers to ‘quantitative fact- Analytics to gain competitive
(e.g., supply chain flows), marketing (e.g., based’ analysis aiding decision advantage.
promotion), human resources (e.g., employee making.
performance), finance (e.g., controlling fraud), and
research and development (R&D).

Davenport and E-commerce functions: finance (e.g., merger & BDA refers to the use of data, Analytics to help build distinctive
Harris (2007b) acquisition), manufacturing, R&D, human resources statistical and quantitative analysis capabilities in an intensely
(e.g., hire, retain, and promote the best people), through explanatory and predictive competitive business environment.
marketing (e.g., identifying profitable and loyal models for facilitating fact-based
customers), and supply chain (e.g., lowest possible management decisions and actions.
inventory without compromising stockouts).
Bose (2009) E-commerce functions including: marketing (direct BDA refers to a group of tools used Assisting business managers to
marketing, customer segmentation, pricing), supply in combination to gain insights in effectively understand the drivers
chain (choice of channel partners), and finance order to direct, optimize, and behind advanced analytics
(customer profitability analysis). automate decision making for implementation.
achieving organizational goals.
Shanks et al. (2010) Functional areas including: production and operations BDA refers to data interpretation to Technology and capabilities using
(sales forecasts, production plans, order deliveries) generate insights that improve analytics lead to value-creating
and marketing (customer attrition, customer decision making, and optimize actions to improve firm
profitability, response rate of marketing campaigns, business processes. performance and competitive
differential pricing, etc.). advantage.
Manyika et al. (2011) All e-commerce functions including: marketing, BDA creates value by creating Potential value of big data for
operations, and the supply chain. transparency, discovering needs, organizations and the economy,
exposing variability, and improving outlining the ways to capture that
performance. value.
LaValle et al. (2011) All e-commerce functions including: marketing BDA is about insights—descriptive, Insightful evidence to help
(loyalty/retention/defection), finance (e.g., budgeting, predictive, and prescriptive—to organizations understand the
revenue growth, cost efficiency), human resources deliver actions that are closely linked opportunity provided by
management (workforce planning/allocation), to business strategy and to information and advanced
operations and production. organizational processes that take analytics.
place at the right time.

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Agarwal and Weill Data in conjunction with emotion significantly
(2012) strengthen the firm’s analytical ability for marketing
(e.g., customer empowerment), human resources (e.g.,
employee empowerment), and supply chain (channel
partner empowerment and relationship).
Davenport (2012) BDA in e-commerce can significantly impact on
product/service development (new features on online
social site), marketing (ad-serving, pricing, trends on
customer sentiments), and process improvement
(price optimization time, service contracts, and
maintenance optimization).
Davenport et al. BDA in e-commerce aids marketing (e.g.,
(2012) customization, on-demand pricing), R&D (e.g.,
discovery of a new drug), and production and
operations.
Dijcks (2012) BDA in e-commerce influences manufacturing
(telemetry reveals usage patterns, failure rates, and
other opportunities for product improvement),
marketing (smartphones and other GPS devices offer
advertisers proximity information, effective micro
customer segmentation and targeted marketing
campaigns), and supply chain (efficiency).
Ferguson (2012) BDA in e-commerce aids operational risk assessment
involving finance (internal fraud, external fraud,
damage to physical assets), marketing
(customer/client intentions and behaviors, products
and business practices), human resources
(employment practices), and information technology
(system failure).
(Kiron et al., BDA in e-commerce influences decisions about
2012a, 2014a) marketing (customer care, customer experience,
pricing strategy, sales, customer service), finance
(productivity, mergers and acquisitions), and
operations.
BDA improves business processes,
emotional connections, and evidence
based on empathetic use of data.
BDA focuses on discovering
products, features, and value-adding
services.
BDA is used to seek continuously
changing patterns, events, and
opportunities to generate discovery
and agility.
BDA supports deeper analysis on a
wider variety of data types,
delivering faster response times
driven by changes in behavior and
automating decisions based on
analytical models.
BDA can be said to be the
multidimensional behavioral analysis
used to discover failure modes in
advance of a disaster.
BDA refers to the application of data
and business insights developed
through applied analytical disciplines
to drive fact-based planning,
decisions, execution, management,
measurement, and learning.
Integration of human emotion in
data analytics in addition to
process automation and
optimization.
Identifying the quality and skill
sets required for people dealing
with big data in order to deliver
high performance analytics (HPA).
Revealing the distinguishing facts
between big data analytics and
traditional analytics, and the ways
to capitalize on insights from big
data.
The importance of and
infrastructure required for business
analytics in the big data
environment.
Explains how analytics helps
organizations better understand
and mitigate everything from risky
business practices to the big
undetectable risks.
Explanations of the practical
concerns that organizations are
facing regarding the use of
analytics.
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 Appendix 2: Nature of big data used in business analytics
Nature Description
Voluminous Large volume of data that
either consume a huge amount
of storage or consist of a large
number of records (Davenport
et al., 2012; Russom, 2011).
Variety Data generated from a greater
variety of sources and formats,
and that contain
multidimensional data fields
(Davenport et al., 2012;
Russom, 2011).
Example (Study)
 Amazon introduced search-inside-the-books option consisting of 120,000 books (Davenport, 2006).
 Dell initiated the development of a database that includes 1.5 million records related to sales and
advertisements (Davenport, 2006).
 Netflix analyzes customer choice and customer feedback from over one billion reviews (Davenport
and Harris, 2007a).
 Match.com has billions of data points to analyze generated from the past 17 years (Kiron et al.,
2012b).
 On Facebook, 30 billion pieces of content are shared every month (Manyika et al., 2011).
 Tesco generates more than 1.5 billion new items of data every month (Manyika et al., 2011).
 Wal-Mart’s data warehouse includes some 2.5 petabytes of information (Manyika et al., 2011).
 The DDB Matrix database includes all print, radio, network TV, and cable ads of Dell, the computer
manufacturer, as well as regional sales data (Davenport, 2006).
 Credit card companies use website click-stream data and other data formats from call center
operations to customize offers (Davenport and Patil, 2012).
 A retailer’s analytic model may include customer profiles and purchase history, regional and seasonal
buying patterns, optimizing of supply chain operations, and unstructured data from social media to
customize predictions by product, store concept, and promotional campaigns, etc. (Biesdorf et al.,
2013).
 Cross-selling uses all possible data that can be identified and stored about a customer, including the
customer’s demographics, purchase history, preferences, real-time locations, and other facts to
increase the average purchase size (Manyika et al., 2011).
 Retailers use sentiment analysis to assess the real-time response to marketing campaigns and to make
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Velocity Frequency of data generation
and/or frequency of data
delivery (Russom, 2011).
adjustments as needed. The evolving field of social media analytics plays a key role as consumers are
relying increasingly on peer sentiment and recommendations (Manyika et al., 2011).
 Research identified 10 distinct methods in which to interact with consumers on social media
throughout the product decision-making process, which range from passive techniques (monitoring
blogs and social networks for references to brands) to direct engagement in the form of targeted
marketing, new-product introductions, or consumer outreach during public relations (Chandrasekaran
et al., 2013).
 Amazon manages a constant flow of new products, suppliers, customers, and promotions without
compromising its promised delivery dates (Davenport, 2006).
 Consumer sentiment analysis through social media analytics requires real-time monitoring of the
environment. The frequent flow of new data makes the decision role frequently obsolete. Trends in
customer sentiments about products, brands, and companies are of high velocity with a larger volume
(Davenport, 2012).
 At Twitter, even at 140 characters per tweet, the data volumes are estimated at eight terabytes per day
due only to the high velocity/frequency (Dijcks, 2012).
 Retailers can now track the individual customer’s data, including click-stream data from the web, and
can leverage based on their behavioral analysis. Moreover, retailers are now capable of updating such
increasingly granular data in near real time to track changes in customer behavior (Manyika et al.,
2011).
 eBay Inc. conducts thousands of experiments with different aspects of its website to determine
optimal layout and other features ranging from navigation to the size of its photos (Manyika et al.,
2011).
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Veracity Generating authenticated and
relevant data with the
capability of screening out bad
data (Beulke, 2011).
 eBay Inc. faced enormous data replication problems, with between 20-fold and 50-fold versions of the
same data scattered throughout its various data marts. Later, eBay Inc. developed an internal website
(a data hub) that enabled managers to filter data replication (Davenport et al., 2012).
 Using data fusion, an organization can combine multiple less reliable sources to create a more
accurate and useful data point, such as social comments affixed to geospatial location information
(Schroeck et al., 2012).
 ‘Black swans’ (the disproportionate quality of high-impact, hard-to-predict, rare events that generally
people do not expect to happen, which are also said to be extreme outliers) are outside the realm of
detection—by quantitative, traditional analytics. Montage Analytics has developed a tool that can
predict areas vulnerable to ‘black swans’ within organizations, and other types of risk involving the
impact of human behavior and motivations (Ferguson, 2012).
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 Appendix 3: Types of big data

Types Descriptions Applications by e-Businesses/Firms

Transaction or Structured data from retail  United Parcel Service (UPS) examines usage patterns and complaints to predict customer
business activity data defection (Davenport, 2006).
transactions, customer profiles,
distribution frequency and  Wal-Mart persuades its suppliers to monitor product movement by store to help plan
volume, product consumption promotions, store layout, and reduce stockouts (Davenport, 2006).
and service usage, nature and  Amazon engages a type of predictive modeling technique called collaborative filtering,
frequency of customer using customer data to generate ‘you might also want’ prompts for each product bought or
complaints visited. Amazon revealed at one point that 30% of sales were generated through its
recommendation engine (Manyika et al., 2011).
 Harrah’s, the US hotels and casinos group, compiles detailed holistic customer profiles and
uses them to customize marketing in a way that has increased customer loyalty (Manyika et
al., 2011).
 Progressive Insurance and Capital One are conducting experiments on a regular basis to
segment their customers systematically and effectively and to personalize product offers
(Manyika et al., 2011).
 Wal-Mart developed Retail Link, a tool that presents its suppliers with a view of the
demand in its stores so suppliers know when stores should be restocked rather than waiting
for an order from Wal-Mart stores (Manyika et al., 2011).

Click-stream data Click-stream data from the  Every day, Google alone processes about 24 petabytes (or 24,000 terabytes) of data
web, social media content, (Davenport, 2012).
online advertisements (tweets,  Netflix Inc. analyzes web data of over one billion reviews of movies that were liked, loved,
blogs, Facebook wall postings, hated, etc. to recommend movies that optimize customers’ tastes and inventory conditions

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 etc.) (Davenport and Harris, 2007b).
 Credit card companies use a ‘ready-to-market’ database of website and call center activities
to make personalized offers in milliseconds and to optimize offers by tracking responses
(Davenport, 2012).
 Merchandise buyers of a retail firm receive a red flag alert when competitors’ internet sites
price products below their retail firm’s level (Biesdorf et al., 2013).
 Retailers use sentiment analysis to assess the real-time response to marketing campaigns
and make adjustments as needed. The evolving field of social media analytics plays a key
role as consumers are relying increasingly on peer sentiment and recommendations
(Manyika et al., 2011).
 eBay Inc. conducts thousands of experiments with different aspects of its website to
determine optimal layout and other features ranging from navigation to the size of its
photos (Manyika et al., 2011).

Video data Video data from retail and  Less than 25% of business and IT professionals with active big data efforts reported that
other settings they have the required capabilities to analyze extremely unstructured data such as voice
and video (Schroeck et al., 2012).
 Some retailers utilize sophisticated image-analysis software linked to their video-
surveillance cameras to track in-store traffic patterns and consumer behavior (Manyika et
al., 2011).
 A consumer goods manufacturer equipped its merchandisers with tablet apps that enable
the use of pictures and data to track shelf-space allocation compared to that of competitors
on a daily basis and also to detect retailers’ compliance with promotion agreements
(Chandrasekaran et al., 2013).
 P&G implemented the use of design tools to create realistic virtual prototypes that lead to

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Voice data Voice data from phone calls,
call centers, customer service
time savings in design iterations. In addition, the virtual-reality techniques allowed the
simulation of new products placed on shelves in order to test design effects internally and
with consumers (Chandrasekaran et al., 2013).
 Credit card companies use and track call center activities to make personalized offers in
milliseconds and to optimize offers by tracking responses (Davenport, 2012).
 Respondents from e-business enterprises (more than half of those with active big data
efforts) reported that they are using advanced capabilities to analyze text in its natural state,
such as the transcripts of call center conversations. These analytics have the ability to
interpret and understand the nuances of language, such as sentiment, slang and intentions
(Schroeck et al., 2012).
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